U.S. shale executives concerned about labor shortages amidst rising costs in 2023

(Bloomberg) — U.S. shale executives remain concerned about the outlook for rising costs going into 2023 as they continue to struggle with hiring and retaining workers, according to the Federal Reserve Bank of Dallas.

“The labor market continues to be incredibly tight in the Permian Basin,” one unidentified respondent was quoted as saying in the bank’s latest quarterly energy survey. “Our company is relying more heavily on rotational employees to service equipment. Permian Basin infrastructure seems to be at max capacity. We are seeing an increase in safety incidents due to poor road conditions and traffic.”

Most respondents polled in the survey, which was released on Dec. 29, said they expect to increase capital spending slightly or significantly next year compared with 2022 levels.

While most also see West Texas Intermediate oil at $80 per bbl or higher at the end of next year — levels that are above the current price — underlying inflation and supply chain issues punctuated by labor shortages also make major production hikes unlikely.